Inflation holds steady at 2% in year to June

UK inflation held steady at the Bank of England's target of 2% in June, with prices rising at their slowest rate in nearly three years.

Prices rose at 2% in the year to June, unchanged from May and partly driven by hotel prices going up, according to the latest official figures.

Some experts pointed out that price rises in areas such as services, which include restaurant and hairdresser prices, were persistent.

That could raise questions for Bank of England policy-makers over when they may be planning to cut interest rates.

The Bank's base rate - which is used to help set mortgage rates and other borrowing costs - currently stands at a 16-year-high of 5.25% after it was increased in a bid to tackle soaring inflation.

Its Monetary Policy Committee (MPC) which votes to set the rate, has held interest rates at this level for several months but some economists have predicted they will cut the rate at the next vote on 1 August.

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